The time value of money refers to the increased value of money after a certain period of investment and reinvestment, which is called the time value of funds. The time value of money comes not from the field of manufacturing, but from the field of social capital circulation.
cause analysis
1, the time value of money is the embodiment of resource scarcity.
Economic and social development consumes social resources, and existing social resources constitute existing social wealth. The future material and cultural products created by these social resources constitute the future social wealth. Because social resources are scarce and can bring more social products, the utility of current commodities is higher than that of future commodities.
Under the condition of monetary economy, money is the embodiment of commodity value. The present money is used to dominate the present goods and the future money is used to dominate the future goods, so the value of the present money is naturally higher than that of the future money.
The market interest rate is a reflection of the average economic growth and the scarcity of social resources, and it is also a standard to measure the time value of money.
2. The time value of money is an inherent feature of currency in circulation under the credit currency system.
Under the current credit currency system, the currency in circulation consists of the base currency of the central bank and the deposits derived from the commercial banking system. Due to the increasing trend of credit currency, currency depreciation and inflation have become common phenomena, and the value of existing currency is always higher than that of future currency.